Journal of Sports Economics recent issues

In Memoriam: Gerald W. Scully (1941-2009)

Porter, P. — Wed, 07 Oct 2009 04:05:57 PDT

Do Teams Always Lose to Win? Performance Incentives and the Player Draft in the Australian Football League

Borland, J., Chicu, M., Macdonald, R. D. — Wed, 07 Oct 2009 04:05:57 PDT

This article examines whether the player draft used since 1986 in the Australian Football League has caused clubs to tank; that is, to seek to lose matches to obtain improved draft choices. A comparison of clubs’ performances in regular season matches played before and after introduction of the draft provides no evidence that clubs have engaged in tanking. The main potential explanations for the absence of tanking in the Australian Football League are the relatively low benefits to clubs from tanking and limited opportunities for them to engage in this behavior.

Uncertain Prospects: Rates of Return in the Baseball Draft

Burger, J. D., Walters, S. J. K. — Wed, 07 Oct 2009 04:05:57 PDT

This study uses a unique data set and valuation method to quantify returns to teams in baseball’s high-stakes, high-risk amateur draft. Thanks to teams’ monopsony power over draftees and low-seniority players, payoffs on successful picks far outweigh losses on unsuccessful ones: the expected annual yield on the median first-round draftee is 44%. However, the pattern of returns is inconsistent with market efficiency. Expected yields are lower for high school draftees than collegians (36% vs. 57%), lower for pitchers than position players (34% vs. 52%), and decline for later-round long shots.

Selection Biases in Sports Markets

Gandelman, N. — Wed, 07 Oct 2009 04:05:57 PDT

This article tests for the existence of two types of selection biases in sports markets. First, the better-educated players and players of higher socioeconomic background have better outside opportunities. If they decide to follow a professional soccer career, they must be truly good to compensate their higher opportunity costs. Second, if innate athletic talent is distributed equally among the population, we should not find any difference in the performance evaluation of White and non-White players. This potential difference provides a ‘‘market test’’ for discrimination. Using data on the Uruguayan Soccer League in the 2000 and 2001 seasons, we find evidence of these two types of selection biases. Our estimations show a positive relationship between education and performance, education and promotions, socioeconomic background and performance, socioeconomic background and promotions, and discrimination against non-White players in the national league but not with respect to international soccer markets.

Minority Status and Managerial Survival in Major League Baseball

Volz, B. — Wed, 07 Oct 2009 04:05:57 PDT

The effect of minority status on managerial survival in Major League Baseball is analyzed using survival time analysis and data envelopment analysis. Efficiency scores based on team performance and player salary data from 1985 to 2006 are computed and included as covariates in a survival time analysis. It is shown that when controlling for performance and personal characteristics minorities are on average 9.6% points more likely to return the following season. Additionally, it is shown that winning percentage has no impact on managerial survival when efficiency is controlled for.

Reply to: Differences in the Success of NFL Coaches by Race: A Different Perspective

Madden, J. F., Ruther, M. — Wed, 07 Oct 2009 04:05:57 PDT

Malone, Couch, and Barrett argue that a broader analysis of fired coaches, including adding in partial season fires, considering a wider range of causes of firing, and analyzing rehiring makes the results reported by Madden ‘‘disappear.’’ We show that Malone et al. have analyzed inaccurate data. When the data used by Malone et al. are corrected and their speculations tested empirically, Madden’s conclusion that analyses of all employment decisions involving head coaches between 1990 and 2002 are consistent with discrimination against African Americans is supported.

Book Review: The Business of Sports, edited by Brad R. Humphreys and Dennis R. Howard. Westport, Connecticut: Praeger, 2008. 299 pp

Kelly, Y. J. — Wed, 07 Oct 2009 04:05:57 PDT

''College Sports in Recessionary Times: Assessing Challenges and Opportunities'': The Third Annual Scholarly Colloquium on Intercollegiate Athletics In Conjunction with the NCAA Annual Convention January 12th and 13th 2010 Atlanta, Georgia

Wed, 07 Oct 2009 04:05:57 PDT

Erratum

Wed, 07 Oct 2009 04:05:57 PDT

The article ‘‘Racial Integration of Coaching’’ (DOI: 10.1177/1527002508324271), by Brian L. Goff and Robert D. Tollison, published in April 2009 issue (Volume 10, Number 2) of Journal of Sports Economics, first paragraph on page 128, says correctly that Frank Robinson was the first black manager in major league baseball (MLB). However, it has the team and year wrong. Frank Robinson was hired by the Indians to be their player-manager in 1975, not by the Orioles in 1974. He managed the Orioles much later.

Why Do Player Trades Dominate Sales?

Marburger, D. R. — Fri, 24 Jul 2009 01:18:37 PDT

Although barter is considered to be inefficient, trades are more common than player sales in professional sports. Theory indicates that when owners have identical constant risk averse preferences, the contract zone for sales shrinks relative to that for trades. Moreover, the gap between the two contract zones becomes larger as the expected quality of the player increases. Probit estimations reveal that the likelihood a player is sold rather than traded increases with age and as the percentage of remaining career productivity decreases. An inverse relationship between player quality and the likelihood of sale for is found for hitters, but not for pitchers.

The Impact of Intercollegiate Athletics on Employment in the Restaurant and Accommodations Industries

Lentz, B. F., Laband, D. N. — Fri, 24 Jul 2009 01:18:37 PDT

In this article, we analyze metropolitan and micropolitan statistical area (MSA) level data in the United States to examine the economic impact of college athletics. Specifically, we examine the relationship between total athletics revenues (aggregated across all colleges in an MSA) and MSA level employment in the accommodations and food services industries. Controlling for a variety of other factors that might influence hotel/restaurant employment within an MSA, we find a statistically significant, positive relationship between college athletics revenues and MSA employment in the food services and accommodations industries.

International Soccer Success and National Institutions

Leeds, M. A., Marikova Leeds, E. — Fri, 24 Jul 2009 01:18:37 PDT

A growing literature has examined the causes of success in international soccer. We build on this literature by constructing a model of international success, as measured by the number of ``Fédération Internationale de Football Association (FIFA) points'' a national team has earned and by the resulting rank. We generate testable hypotheses about the impact of a nation's political regime, colonial heritage, and institutions on its soccer performance. Using ordinary least squares (OLS) and negative binomial regressions, we show that our proxies for these variables affect soccer performance. Specifically, we find that the international success of a country's club teams positively affects the national team's success.

The Impact of Seeding, Home Continent, and Hosting on FIFA World Cup Results

Monks, J., Husch, J. — Fri, 24 Jul 2009 01:18:37 PDT

Every 4 years, Fédération Internationale de Football Association (FIFA) organizes one of the largest sporting events in the world, the soccer (football) World Cup tournament. Successful players, teams, and national soccer federations are the recipients of significant financial returns, both directly from FIFA and indirectly through professional and endorsement contracts. The structure of this tournament is such that playing on one's own continent and being a seeded team have significant effects on World Cup success. Specifically, we estimate that the ``continental effect'' increases a team's probability of reaching the final eight by 12% points, whereas being seeded increases one's probability of making the quarterfinals by 26% points.

Pool Revenue Sharing, Team Investments, and Competitive Balance in Professional Sports A Theoretical Analysis

Chang, Y.-M., Sanders, S. — Fri, 24 Jul 2009 01:18:37 PDT

Using a contest model of a professional sports league, we show that pool revenue sharing has a negative effect on total expenditure for player talent. There are ``moral hazard'' problems with lower revenue teams in that they may pocket the money they receive from the pool without increasing talent investments. Based on four alternative measures of competitive balance, we find that pool revenue sharing increases the variance of expected winning percentages for a match and thus reduces the degree of competition in the league. Policy recommendations that combine pool revenue sharing with the requirement of a minimum payroll on players are shown to be procompetitive.

The Payoff to Leadership in Teams

Deutscher, C. — Fri, 24 Jul 2009 01:18:37 PDT

In team sports, as well as in other group productions, some individuals are asked to show leadership skills. Although it is assumed that this ability is compensated monetarily, there is a lack of empirical evidence for this common thesis. Because in professional sports the team captains are expected to possess these leadership skills, this article will explore the impact of this ability on the salary. Controlling for individual player characteristics and performance indicators for players from the National Hockey League, the author shows that leadership ability is rewarded pecuniary by a wage premium between 21% and 35%.

Book Review: Russell, G. W. (2008). Aggression in the Sports World: A Social Psychological Perspective. New York: Oxford University Press

Kendall, T. D. — Fri, 24 Jul 2009 01:18:37 PDT

Book Review: Sandy, R., Sloane, P. J., & Rosentraub, M. S. (2004). The Economics of Sport: An International Perspective. New York: Palgrave

Coates, D. — Fri, 24 Jul 2009 01:18:37 PDT

The Impact of Postseason Restructuring on the Competitive Balance and Fan Demand in Major League Baseball

Young Hoon Lee, — Wed, 24 Jun 2009 04:24:47 PDT

The author analyzed issues of playoff uncertainty (PU) by examining competitive balance and outcome uncertainty. Specifically, the author (a) developed an alternative measure of PU, (b) analyzed the relationship between PU and postseason structure in Major League Baseball (MLB), and (c) tested the PU of the outcome hypothesis using our PU measure. The results provide empirical evidence that postseason restructurings in 1969 and 1995 enhanced the PU significantly and had positive effects on fan demand for MLB. This implies that the league office can partly control PU by revising the league structure and thus increasing fan demand.

Contests, Grand Prizes, and the Hot Hand

McFall, T. A., Knoeber, C. R., Thurman, W. N. — Wed, 24 Jun 2009 04:24:47 PDT

Awarding a grand prize to the player who wins most often in a series of contests links the contests together and makes incentives in the current contest depend on past performance. A lucky player who wins early faces relatively stronger economic incentives to exert effort because of his early success. As a consequence, early winners are more likely to keep winning through the middle of the series. That is, a grand prize generates what looks like a hot hand. Indeed, this argument about economic incentives may help to rationalize the inconsistent evidence of a hot hand in sporting events. This article develops this argument and assesses it empirically using data from the Professional Golfers' Association Tour, before and after a grand prize, the season-ending Tour Championship, was introduced.

Determinants of Pay in the NHL: A Quantile Regression Approach

Vincent, C., Eastman, B. — Wed, 24 Jun 2009 04:24:47 PDT

Using data from the pre-2004-2005 lockout period, we use quantile regression to estimate the earnings function of forwards and defensemen in the National Hockey League (NHL). We find that the explanatory power of Mincer's earnings equation is smaller for low-paid players than for high-paid stars. More importantly, we find significant differences in the returns to measures of performance and other variables across the conditional earnings distribution. Our estimation results suggest that the conditional expectation model used in previous studies misses some of the subtleties of the earnings determination process in professional hockey.

Strategic Free Agency in Baseball

Rockerbie, D. W. — Wed, 24 Jun 2009 04:24:47 PDT

This article investigates whether a greater supply of free-agent baseball players at a particular position has any effect on negotiated salaries. A simple auction model of free-agent salaries with many bidders is developed that suggests that a greater supply of positional free-agent players should lower the path of winning bids in sequential player auctions. A drop in the valuation of the marginal bidder in a sequence of player auctions also drops the path of winning bids. There may be an incentive to defer free agency by including an option year in a player contract. The effect of the number of free agents on salaries is tested using free-agent salary settlements for the 1997-2002 seasons.

Shirking in Major League Baseball Revisited

Krautmann, A. C., Donley, T. D. — Wed, 24 Jun 2009 04:24:47 PDT

A number of studies in sports economics looked at the shirking problem inherent in long-term contracts. Shirking is inferred if the player's actual performance falls below expected performance in the year following a newly signed long-term contract. In an attempt to shed light on these conflicting conclusions in the literature, we outline a novel approach for testing opportunistic behavior. We begin by running a standard test of shirking based upon a comparison of the player's expected to realized performance. We then introduce a new approach to analyzing shirking—one which is based on a comparison of a player's expected to realized Marginal Revenue Product. We find that tests for shirking are sensitive to the approach one uses in the analysis. In particular, when testing for opportunistic behavior using performance, we find no evidence of shirking. Yet when we conduct the test based on MRP, our tests suggest that players signing multi-year contracts create less value than they were expected to generate.

Are Three Points for a Win Really Better Than Two?: A Comparison of German Soccer League and Cup Games

Dilger, A., Geyer, H. — Wed, 24 Jun 2009 04:24:47 PDT

The effects of the three-point rule in the first league German soccer are tested empirically and compared to games from the German cup competition. The inclusion of cup games ensures that changes in league games can be attributed to the three-point rule. As a result of their relative devaluation, the number of draws should decrease. Furthermore, an increase in the number of close wins is expected. The strategy of a leading team becomes more defensive, resulting in fewer goal shootings by that team, as well as fewer shooting opportunities for the opponent. Empirical evidence supporting these effects is found.

Book Review: Gennaro, Vince. (2007). Diamond Dollars: The Economics of Winning in Baseball. Hingham, MA: Maple Street Press

Sanderson, A. R. — Wed, 24 Jun 2009 04:24:47 PDT

Book Review: Grant, Randy R., Leadly, John, and Zygmont, Zenon. (2008). Economics of Intercollegiate Sports. Hackensack, NJ: World Scientific

Goff, B. — Wed, 24 Jun 2009 04:24:47 PDT

Book Review: Hogshead-Makar, N., & Zimbalist, A. (Eds.). (2007). Equal Play: Title IX and Social Change. Philadelphia: Temple University Press

Carroll, K. A. — Wed, 24 Jun 2009 04:24:47 PDT

Racial Integration of Coaching: Evidence From the NFL

Goff, B. L., Tollison, R. D. — Thu, 12 Mar 2009 11:38:48 PDT

Using National Football League (NFL) data from 1987 to 2007, we examine the hiring of African American head coaches. Our results partly support an innovation explanation in that integration proceeded more rapidly in larger population centers. In contrast, we find only mixed and weak evidence that winning organizations proceeded first in hiring Black managers as in the case of using Black players. This difference in the hiring process of management versus labor may reflect a difference in the relative importance of endowment versus training. Our evidence also indicates that individual owner preferences matter along with changes in social pressures over time. As with player integration, it appears that a full generation is needed for the process to work itself out.

Who Integrated Major League Baseball Faster: Winning Teams or Losing Teams?

Hanssen, F. A., Meehan, J. W. — Thu, 12 Mar 2009 11:38:48 PDT

In this article, the authors investigate the process of racial integration in Major League Baseball, critiquing the empirical approach used by Goff, McCormick, and Tollison (GMT; 2002). GMT claim to find evidence suggesting that winners integrated fastest. This study shows that when their empirical model is properly specified, the results do not support that conclusion. Several alternative tests are employed and the evidence is inconclusive—if anything, there is some weak support for the hypothesis that losers integrate faster.

A Hybrid Individual--Zonal Travel Cost Model for Estimating the Consumer Surplus of Golfing in Colorado

Loomis, J., Tadjion, O., Watson, P., Wilson, J., Davies, S., Thilmany, D. — Thu, 12 Mar 2009 11:38:48 PDT

Although golf is a popular activity and significant industry, there is little known about the price elasticity of demand for golf, nor the benefits received by the golfers themselves. Using a survey of Colorado golfers at 19 golf courses and a relatively novel hybrid individual observation and zonal travel cost model, the authors find the demand for golf is quite price inelastic with respect to transportation costs (–.433) and green fees (–.115). The typical golfer spends $8 on transportation and $49 on green fees/ carts. The price inelastic demands translate into a consumer surplus of $18.44 per round of golf at Colorado golf courses. The annual net economic value to golfers in Colorado for the 7.8 million rounds of golf is $143.8 million. The authors find a ``U'' shaped quadratic relationship between age and golf demand, such that retirement age golfers take about 30% more trips than middle age golfers.

The Postseason Value of an Elite Player to a Contending Team

Krautmann, A. C., Ciecka, J. — Thu, 12 Mar 2009 11:38:48 PDT

This paper suggests the possibility that a superstar's ability to propel a team into the playoffs may make him particularly valuable—pushing his salary beyond that which would otherwise be expected. Whereas a team in Major League Baseball (MLB) could play as many as 11 additional home games by the time it concludes the World Series, the number of home-field playoff games is a random variable with a mean of about 4 extra home games. Using reasonable assumptions, this implies that the expected increase in a MLB team's revenues associated with making the playoffs is about $11 million. The analysis shows that contending teams pay elite players (on average) an extra $2.8 million—a 40% bonus—to lure superstars to their rosters.

Arenas Versus Multifunctional Stadiums: Which Do Spectators Prefer?

Feddersen, A., Maennig, W. — Thu, 12 Mar 2009 11:38:48 PDT

Construction of large sports stadiums follows two different general concepts: (a) monofunctional arenas that are specially suited for one sport exclusively and that are characterized by the absence of an athletic track and (b) multifunctional sports stadiums that can be used for different sporting or cultural events. Officials of clubs often argue that the atmosphere in an arena is significantly better than that of a multipurpose facility and that spectators prefer such an atmosphere. Estimated panel regression with fixed effects shows a significant positive effect of a monofunctional soccer stadium on spectator demand. Controlling for other demand determinants in the German professional soccer league, Bundesliga, an isolated effect of around 2,800 additional spectators a game can be found. This translates into a substantial increase of about 10.7% against the mean value of 25,602 spectators per Bundesliga game in the seasons 1963-1964 to 2005-2006.

The Impact of Team Revenues on MLB Salaries

Brown, K. H., Jepsen, L. K. — Thu, 12 Mar 2009 11:38:48 PDT

We test which individual major league baseball (MLB) player characteristics, such as on-base and slugging percentages, predict a hitter's salary. We also consider whether some MLB teams pay more per individual characteristic than others by using a hierarchical linear model to allow the value that a team places on a player characteristic to vary across teams. We find that offensive statistics are key determinants of player salaries but that teams do not pay differently for them. There are team differences, however, in the salaries received by players who are eligible for arbitration.

Comment on ``A Stadium by Any Other Name: The Value of Naming Rights''

Blair, R. D., Haynes, J. S. — Thu, 12 Mar 2009 11:38:48 PDT

Response to Blair and Haynes

Leeds, E. M., Leeds, M. A., Pistolet, I. — Thu, 12 Mar 2009 11:38:48 PDT

Book Review: Kesenne, S. (2007). The Economic Theory of Professional Team Sports: An Analytical Treatment. Cheltenham, United Kingdom: Edward Elgar

Simmons, R. — Thu, 12 Mar 2009 11:38:48 PDT

Call for Papers: First European Conference in Sports Economics

Thu, 12 Mar 2009 11:38:48 PDT